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Terra founder accused of cashing out $2.7bn prior to Luna crash

Terra founder accused of cashing out $2.7bn prior to Luna crash
Photo Credit: 123RF.com
13 Jun, 2022

Do Kwon, the founder of Terraform Labs – which runs the revived Terra blockchain – has been accused by a whistleblower of cashing out billions of dollars of liquidity via Luna tokens, prior to the latter’s notorious crash last month. According to a user who goes by the name ‘Fatman’ on Twitter, Kwon reportedly used decentralized finance (defi) lending platform Abracadabra Degenbox, and its tokens ‘Spell’ and ‘Mim’, to cash out close to $2.7 billion from the Luna stablecoin ecosystem.

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Kwon, however, has denied these accusations, stating that the whistleblower’s accusations are “categorically false”. He has also stated that he did not use any of his founder’s tokens from the Terra Luna ecosystem, and has only drawn a “nominal cash salary” via Terraform Labs over the past two years.

Accusations against Kwon have also claimed that the Terraform Labs founder still owns most of his Luna tokens since the revived Terra blockchain’s airdrop of a new Luna token was designed to do so. He has denied these allegations as well.

Last month, the Luna token, pegged to algorithmic stablecoin TerraUSD in the Terra blockchain, lost close to 99% of its value in the span of a couple of days, wiping out most of the value from the stablecoin project. Since then, Kwon proposed a revival of the Terra blockchain, called Terra 2.0, which has since seen a new Luna token being listed on various cryptocurrency exchanges around the world.

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The new Luna token, however, has not particularly been successful. Ever since re-listing across various exchanges at a high of around $19.5 on May 27, Luna has since lost over 86% of its value. The crypto token is trading at around $2.64 at the time of publishing, showing a clear decline in its value ever since being relisted.

Kwon has attracted a fair share of controversies in the past, having been labeled arrogant and calling people “poor” in public forum. While he has continued to deny any allegations of orchestrating the crash of the original Luna/Terra stablecoin pair, it remains to be seen if the revived Terra blockchain can sustain its revival going forward.